RED CARD TO RED TAPE HOW SPORT AND RECREATION CLUBS WANT TO BREAK FREE FROM BUREAUCRACY

Transcription

1 RED CARD TO RED TAPE HOW SPORT AND RECREATION CLUBS WANT TO BREAK FREE FROM BUREAUCRACY A REPORT COMMISSIONED BY THE DEPARTMENT FOR CULTURE, MEDIA AND SPORT RESEARCHED AND WRITTEN BY THE SPORT AND RECREATION ALLIANCE

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4 3 ACKNOWLEDGEMENTS 5 CONTENTS FOREWORD 6 EXECUTIVE SUMMARY 7 CLUBS Community Amateur Sports Clubs (CASCs) Clubmark Charitable status Data protection TRAINING NEEDS Coaching requirements Coaching costs to the volunteer financial and time Vetting and Barring Scheme and Criminal Records Bureau Checks The background to CRB checks in sport The background to introducing the Vetting and Barring Scheme to sport The outcomes of the Review of Criminal Records and the Review and scaling back of the Vetting and Barring Scheme: the impact on sport Reducing the burden without reducing the safeguards Employment law Working Time Directive HEALTH AND SAFETY Health and Safety at Work Act Risk management Insurance Public liability insurance Arranging insurance cover Insurance and litigation Occupiers liability Adventure activities

5 4 FINANCE AND FUNDING Applying for funding Finding funding Reporting requirements for funding Matched-funding requirements Facility funding Fundraising and Gift Aid Lotteries and raffles FINANCE AND TAXATION Corporation tax Value Added Tax Guidance on taxation Rateable value of the club site Gift Aid National Sports Foundation Music licensing Charitable status and the Charities Act Alcohol licensing Utilities FACILITIES AND ACCESS Facilities Playing fields Floodlighting Daylight saving Demolition of facilities Planning obligations and development Community Asset Transfer Scheme School facilities Access to land, water and air for sport and recreation Public rights of way Volunteer maintenance work Access land Sporting events on public paths and roads Access to inland water Air sport Firearm sports METHODOLOGY

6 5 CHAPTER ONE INTRODUCTION ACKNOWLEDGEMENTS This Review has received wide support across the sport and recreation sector and many people and organisations have taken the time to share their thoughts and knowledge about the red tape that really holds them back. The Sport and Recreation Alliance would like to thank everyone who has contributed to the development of this Review along the way. With thanks to: The 1,401 sports clubs and their volunteers who completed the online survey; All of the sports clubs that formed the basis of our case studies; Attendees of the expert witness sessions - experts and organisations who shared their considerable knowledge with the Review; National governing bodies, sporting organisations and individuals who submitted written evidence; All those at the Sport and Recreation Alliance who have contributed their hard work, invaluable input and support. Special thanks also to the Foundation for Sport and the Arts for helping to fund this important research. The Review was researched and drafted by Syann Cox, research and evidence officer at the Sport and Recreation Alliance. Without her diligence, dedication and attention to detail its publication would not have been possible.

7 INTRODUCTION 6 There are 150,000 sports clubs across the UK. They are a welcome feature of every town and village across the country. From the leafy village cricket club to the floodlit midnight basketball league, our clubs are as much a part of the fabric of our communities as our primary schools, post offices and family doctors. Our clubs are run by volunteers. These people give up their time because they love their particular sport and they want to pass on the same opportunities they had, to give something back to their community or to feel part of something bigger. Yet today they are fed up. Because, as the years have gone by, many have begun to feel that their efforts are being deadened by the creeping burden of official red tape and bureaucracy; that rather than helping to run a club, they are helping bureaucrats. They are spending club time and club money on things which mean little to the club. No one remembers when it began. I am sure that the first form to be issued to sports clubs was well-intentioned; that it was intended to improve some aspect or other of clubs contribution to their communities. But soon there was another form. And then came a regulation. And then there was a legal duty. And then there was a licence. Before anyone knew it, many of our sports clubs were beset with red tape and bureaucracy and all to do more or less exactly the same things they were doing 100 years ago but without any of the forms, licences or certificates. The Sport and Recreation Alliance represents 320 governing and representative bodies of sport and recreation organisations like The FA, the Lawn Tennis Association, the Ramblers and the British Dance Council. And for many years we have fought against the tide of red tape. But whenever we have raised a concern we invariably hear that there is a particularly good reason in this instance: that this is something that can no longer be overlooked; that there is demand from the public for this to happen. At no point did anyone in Government look at the bigger picture of how a regulation from one Government Department was added to a requirement from a local authority, which sat on top of a licence demanded from a non-departmental body. Thus slowly but surely our sports clubs have been inundated with bureaucracy. So when asked by Hugh Robertson MP, Minister for Sport and the Olympics, to compile a review into the weight of this bureaucracy and red tape the Sport and Recreation Alliance was only too happy to help. This Review has compiled evidence from 1,400 sports clubs. It has held expert workshops and invited evidence from every side of the debate. We have been able to be so thorough thanks to the generous support of the Foundation for Sport and the Arts. The Review s findings and most importantly its suggestions to reduce red tape will form part of the Government s wider review of regulation. As well-meaning as most regulation is, we are delighted that Ministers are now taking a more holistic view of how it is affecting our sports clubs they have given us hope that our sports clubs will not die of a thousand regulatory cuts. FOREWORD BRIGID SIMMONDS OBE CHAIR OF THE SPORT AND RECREATION ALLIANCE

8 7 CHAPTER ONE EXECUTIVE SUMMARY THE COMMUNITY AMATEUR SPORTS CLUB (CASC) SCHEME CASC status recognises the importance of sports clubs to the community. The primary benefit of being a CASC is financial. It is estimated that since 2002 almost 6,000 CASCs have saved 85.1 million. The scheme distinguishes between clubs and businesses for rates and tax purposes and allows money to be raised through Gift Aid. However, financial limits for taxation benefits have not risen in line with inflation, CASCs are still charged VAT on facility construction costs and Gift Aid is not available on subscription fees. The administrative process of becoming a CASC is onerous if clubs need to amend their constitution and de-registering is difficult, but would be necessary if the club ever became successful enough to pay their top tier of players. The scheme does not offer enough for non-facility owning clubs. SOLUTIONS Refine the entire CASC scheme by amending the Corporation Tax Act Increase the corporation tax exemption threshold for CASCs in line with inflation. Include CASCs in existing charity zero-rating relief on construction costs so that they are exempt from VAT on capital expenditure. VAT on facility hire should be at reduced rates for CASCs to increase the benefits for non-facility owning clubs as allowed by the EU VAT Directive. Registered clubs should be allowed to claim Gift Aid on junior subscriptions. There should be easy exit from the scheme if a club can show the scheme to no longer be of benefit. National governing bodies (NGBs) must take responsibility for championing CASCs and agree CASC-compliant model constitutions for their clubs to use with HMRC.

9 EXECUTIVE SUMMARY 8 Clubmark is a quality accreditation scheme for clubs with junior sections. It requires coaching staff to be skilled and facilities to be fit for purpose. It focuses on protecting young people and the development of the club. Ten thousand clubs across 52 sports are currently Clubmark-accredited or working towards this goal. It is reported that there is too much paperwork associated with providing the evidence to achieve this accreditation and clubs often perceive it as a checklist, rather than a true development tool. CLUBMARK The intention of the scheme is sound but the application process needs to be easier. A centralised online tool could be beneficial for clubs to manage their application, but more importantly Sport England and the respective sports councils must work with national governing bodies to ensure Clubmark is used to develop a club, not to provide it with paperwork. SOLUTIONS Sports clubs are required to make sure that they follow the principles of the Data Protection Act. This includes registering with the Information Commissioner s Office as a data controller and making all employees and volunteers aware of their responsibilities. Two in five clubs (41%) experience a negative impact from data protection laws and generally clubs are confused about what they must do to comply. DATA PROTECTION The UK Data Protection Act 1998 should extend the exemption from registering with the Commissioner s Office as a data controller so that it covers voluntary sports clubs. NGBs must demystify data protection laws for sport. The Sport and Recreation Alliance should produce template documents for clubs aimed at allowing the free flow of personal information and compliance with data protection legislation. SOLUTIONS

10 9 CHAPTER ONE COACHING QUALIFICATIONS Two in three clubs (64%) believe coaching qualifications have a negative impact on the way they run, making this the biggest complaint for grassroots clubs. Sports clubs must ensure that their coaches are trained to a recognised standard of competency that is comparable across sports through the National Qualifications Framework. Perception of the need for the non-mandatory UK Coaching Certificate (UKCC) is increasing and can place smaller clubs under pressure. The cost of coaching qualifications is usually met by the volunteer. The cost increases with each level of qualification and the cumulative cost of progressing, as well as the length of programmes, deters volunteers from embarking on Level 1 qualifications. SOLUTIONS The coaching structure across sports, further education and the UKCC must be more joined-up. NGBs must own their own strategies and work with sports coach UK to better understand the coaching needs of their clubs in order to provide coaching courses that offer better value for money. Introducing lower level, NGB-led informal coaching courses for volunteers wanting to hold basic training sessions has been a success for some sports already. VETTING AND BARRING SCHEME The Vetting and Barring Scheme is designed to ensure that anyone who presents a known risk to vulnerable groups is prevented from working with them. The principles of the scheme are considered sound by the sport and recreation sector. The sports sector is concerned that the Protection of Freedoms Bill which will amend the scheme will not take into account the infrastructure and nuances of the way sport is structured. The danger is that volunteers will suffer from unnecessary burdens - and that the processes will not be effective in safeguarding vulnerable groups. SOLUTIONS Consultation with the sport and recreation sector on the Protection of Freedoms Bill is vital - the Government needs to listen to sport s specific needs and ensure that NGBs are given the autonomy to decide which roles are regulated and so need vetting before appointment.

11 EXECUTIVE SUMMARY 10 The CRB system has enabled the sport and recreation sector to make risk assessments a part of safe recruitment practices. NGBs have been the centralised recipients of CRB disclosures and have managed the checking process well. If, as recommended in the review of the CRB system, only the individual and not the organisation, receives a copy of the CRB disclosure there is a danger that safeguarding will not be sufficiently managed and that a known offender could remain in the sport at a different club. One proposal for streamlining the system is an online update check but it will only reduce the burden for volunteers if NGBs are automatically notified of changes in status. The FA alone has some 250,000 volunteers. Regularly checking all these details could be a phenomenal burden for sport. CRIMINAL RECORDS BUREAU (CRB) CHECKS The Government must be clear about how the online update check will work and ensure that whatever improvements are made to the CRB service, the service is free for volunteers. SOLUTIONS

12 11 CHAPTER ONE HEALTH AND SAFETY Three in five clubs (57%) report health and safety legislation as having a negative impact whilst almost one in four clubs (23%) acknowledge the positive impact it has. Professionals in the field of sports safety and risk management believe that fundamentally legislation is working. The majority of community sport and recreation clubs do not have enough employees to be covered by the Health and Safety at Work Act, yet a club s best practice models are often based on the provisions of the Act and volunteers feel pressured to overcompensate. The line between what a community club is required to do and what is unnecessary has been blurred and volunteers are experiencing reasonable health and safety requirements negatively. Risk assessments are also often considered burdensome; the clubs that embrace risk assessments most successfully tend to be those that the public perceive to be higher risk, including flying sports, diving, shooting and motorsports. SOLUTIONS An overarching approach will not work this is the cause of so much existing confusion. Individual sports must manage their own risks appropriately. The Health and Safety Executive (HSE) should work with individual NGBs to create guidance that correctly interprets the Act and is appropriate for their clubs. Measures that are reasonably practicable are actually all that clubs are required to comply with and NGBs must help clubs to understand what this means in theory and in practice for their sport. INSURANCE There is a lack of understanding at a community club level around insurance needs and necessary cover. Public liability insurance is not a legal requirement for sports clubs but it has effectively become compulsory. Where public liability insurance is concerned, a limit for indemnity cover must be set. Many local authorities insist on an indemnity limit of at least 2 million, and in some instances up to 10 million. The rise of no win, no fee legal companies means relatively impoverished sports clubs are vulnerable to claims. In some instances individual volunteers are targeted for remuneration. SOLUTIONS NGBs could outline appropriate and suitable insurance cover for their clubs, and in many instances provide it. Local authorities should be prepared to accept indemnity limits set by the NGB to be sufficient for that club to use their facilities and make it easier to use community facilities. The Ministry of Justice should seek ways to introduce a proportional limit between the legal costs of the claimant and defendant to help cap the legal costs. Advertising should be limited for no win, no fee solicitors and they should be prevented from targeting sports clubs.

13 EXECUTIVE SUMMARY 12 Grants from Sport England for facility funding originate from the Treasury, yet once clubs receive funding they pay VAT back to the Treasury. Additionally Sport England requires NGBs to pay a legal charge to secure ownership of the land should the club fold, but for an NGB to recover land from a club in this manner is rare. Clubs must be able to demonstrate that they have the right to continue to occupy the site, by either owning the land or having a lease which runs for a minimum of seven up to a maximum of 21 years. FACILITIES FUNDING VAT should not be levied on capital expenditure which has been funded through Sport England grants. DCMS should relax the legal processes on securing the land for facility funding given that NGBs do not tend to need to reclaim the land. The award of Sport England facility funding should protect the lease of the site for at least 25 years. SOLUTIONS Funding often goes to clubs which can complete application forms the best, not clubs who need the money the most. The criteria for funding allocations are littered with buzz words to match the latest political sporting agendas. Reporting requirements differ for each application from no reporting at all to lengthy evidence-based reporting procedures. Some grants will require monitoring and evaluation before funds are even released. APPLICATIONS AND REPORTING The Government should produce guidance on the essential criteria to be included according to the value of the grant. Plain English should be used in application form questions. Clear criteria for clubs should be set to prevent volunteers devoting time unnecessarily to application forms and reporting requirements made clear at the start. Small grants should not require monitoring and those up to 10,000 should require minimal reporting, as is now the case with Sport England grants. SOLUTIONS

14 13 CHAPTER ONE TAXATION Bureaucracy and burdens around taxation have a negative impact on over half (54%) of all clubs. The nil-rate band for corporation tax was removed in 2006 so, even if no tax is due, a club must file an annual self-assessment return unless it has a tax liability of less than 100 and has applied to be exempt. The income that the Treasury receives from small claims does not outweigh the costs of pursuing sports clubs for the tax - small sports clubs filing tax returns is therefore a drain on volunteer and Treasury resources. In terms of VAT, the UK does not implement reliefs outlined in the EU VAT Directive and the de minimus provisions which allow the reclaiming of VAT have not increased from the 7,500 per year level since Sports clubs also cannot fully reclaim VAT on capital expenditure; which means they are taxed on making improvements and developing new facilities while a business can reclaim VAT on purchases that are in furtherance of their business. Where funding has originated from government, charging VAT means up to 20% of any government grant returns to government a circular and unnecessary process which reduces the amount of money available for grassroots sport and ties up volunteer time. SOLUTIONS A nil-rate band for Community Amateur Sports Clubs (CASCs) corporation tax should be introduced to help clubs. In addition the thresholds for tax exemption should rise in line with inflation. The VAT concessions allowed by the EU VAT Directive should be implemented and the de minimus level for reclaiming VAT raised in line with inflation. CASCs should receive the same zero-rating benefits on construction expenditure as charities and VAT should not be levied on capital expenditure which has been funded through Sport England grants.

15 EXECUTIVE SUMMARY 14 Non-domestic properties must pay business rates to contribute to the costs of local authority services; these are calculated on the rateable value given to the property. Two in five clubs (41%) suffer as a result of the rateable value of their club site. Rates charge community sports clubs like businesses. Given the size of land needed for most sports, the costs can be enormous and are on the up. Local authorities are able to offer discretionary rate relief of up to 100% for their community clubs but with finances becoming tighter this is increasingly being withdrawn. Furthermore, clubs are experiencing increases in their rateable values based on improvements they have made to their facilities, often with Sport England grants. This equates to a tax on investment. RATEABLE VALUES OF THE CLUB SITE A social tariff should be introduced for the assessment of business rates that accounts for the intended use of the property as well as its potential annual rent. Local authorities should be encouraged by the Department for Communities and Local Government to see the value of offering rate relief to voluntary-run community organisations. National governing bodies, local authorities and the Department for Communities and Local Government should encourage clubs to become CASCs so that they can qualify for the 80% mandatory rate relief. SOLUTIONS When a sound recording is played in public, licensing fees must be paid. Currently, sports clubs and other organisations that are not established or conducted for profit and whose main objectives are charitable, are exempt from paying PPL music licensing. However, a change in the law in 2010 overturned this exemption and clubs will have to pay. Music licensing legislation already has a negative impact on two in five clubs (41%); this is only set to increase given the proposed changes. Charges will apply even if a sports club has a radio on in the kitchen, or a television on showing sports results. MUSIC LICENSING LEGISLATION The Government should recommend that music licensing fees should be proportional only to income related to the actual playing of music (e.g. bars, events, etc). Proportional measures should be in place to ensure non-profit clubs are not charged excessively when no profit is being made and a cap should be placed on the maximum music license fee for sports clubs. CASCs should benefit from a zero-rate fee. The Government would be better served in supporting performing artists by ensuring that the digital economy was protected from piracy rather than asking voluntary organisations to foot the bill. SOLUTIONS

16 15 CHAPTER ONE ALCOHOL LICENSING The Licensing Act includes laws on the provision of alcohol primarily aimed at bars, clubs and pubs but which adversely impact on over a third of all clubs (38%), unfairly penalising their attempts to generate enough income to survive. The latest licensing stream bands affect all venues which sell drinks, but do not take into account the community status of organisations such as sports clubs. In essence, clubs are subject to the same rules and regulations as profit-making high street bars. SOLUTIONS The nature of sport and the community role of clubs should be recognised and all sports clubs should be automatically placed in Band A when evaluated for alcohol licensing and not be subject to a late night levy when holding small, social functions. FACILITIES AND ACCESS There is inadequate protection from demolition for sports buildings, making facility owning sports clubs vulnerable, while gaining planning permission for floodlights is also problematic for clubs. Planning application fees and other compulsory surveys associated with development can be excessively high and Planning Policy Statement 4 (Planning for Town Centres) defines health and fitness centres as a town centre use which places limits on the number of facilities in a particular area; the guidance is often misinterpreted which can prevent the development of community facilities too. Meanwhile, Community Asset Transfer (CAT) is being used by councils as a means to unload unwanted assets with failing finances onto volunteers who are not equipped to deal with such an asset. SOLUTIONS The General Permitted Development Order should be amended so that development rights for the demolition of sports buildings are removed. The National Planning Policy Framework (or supplementary guidance) should clarify that the latest retractable floodlight technology, which minimises light spill, is suitable for community use and should not prescribe health and fitness as a town centre use. It is vital that there is support for clubs when assets are transferred from public ownership into community ownership.

17 EXECUTIVE SUMMARY 16 Under legislation, a playing pitch is defined as a delineated area which can be used for one or more of 15 specified sports. This definition excludes many other sports that also use playing fields and outdoor space. The relevant planning order requires a playing field to be used as such in the five years prior to the making of any planning application. If it has not, there is no requirement to consult Sport England before a planning application. This is known as the five year loophole and it allows well informed landowners to close fields off to the public in order to avoid consulting with Sport England five years down the line. PLAYING FIELDS If the Government is serious about protecting the places people use, then playing fields for all sports and non-grass facilities must also be protected. A static list in the Town and Country Order is not useful and needs to be revised. At the same time the words, at any time in the five years should be removed from the General Development Procedure Order. SOLUTIONS

18 17 CHAPTER ONE VOLUNTEER MAINTENANCE WORK Local authorities are required by law to keep the 140,000 miles of paths under the public rights of way network open, maintained and recorded. However 49% of footpaths in Wales are rated as difficult or impossible to use and there is an average of five obstructions per 10km in England. Notifying the local authority of maintenance issues and reminding them again and again can take a volunteer more time than conducting the maintenance work themselves yet they are often deterred from doing just this by local authority requirements around insurance or training. SOLUTIONS Power should be devolved downwards to local communities who have a vested interest in their local public rights of way. The Government should champion this cause, which epitomises the Big Society so that the issue of local authority insurance does not stand in the way of community goals. ROAD EVENTS Cycling clubs report the Cycle Racing on the Highway Regulations 1960 to be outdated, making it more difficult than it should be for volunteers to arrange events. Regulations are overly-complex and open to a wide variety of interpretations. For motorsport, to hold an event on roads requires an Act of Parliament to temporarily suspend the Road Traffic Act. This is a costly procedure. The benefits of more easily holding motor vehicle races on public roads would stretch far beyond recreation; it is estimated that 20 events a year would deliver 40m of economic benefit to local economies over the next five years. SOLUTIONS The Government is actively working on solutions to improve access for cycling races. It is important that any changes do not affect other sports; currently legislation affecting time-trialling, for example, is in fact favourable. The good work must also be transferrable to other sports where applicable. For motorsport, the Government should amend the Act so that local authorities have the power to decide whether to close down a road to hold a road racing event.

19 EXECUTIVE SUMMARY 18 ACCESS TO SCHOOL FACILITIES Half (49%) of clubs report that gaining access to school facilities has a negative impact on them, with anecdotal reports of clubs driving past closed school facilities to reach the facilities they can use. There are myriad reasons a school might use for not opening its doors for out-of-hours community use including insurance needs, the lack of an affiliation to a national governing body, design barriers, lack of management capacity, concern over financial viability, staff mind-sets and VAT requirements. SOLUTIONS The Government must tackle the barriers for schools wishing to share sports facilities with the community. Accessing local facilities should be the cornerstone of the Big Society. The VAT Act 1994 should be amended so that when any school is open for community use, VAT does not need to be paid on the construction costs. The Department for Education should update and consolidate existing guidance around out-of-hours use of school facilities.

20 19 CHAPTER TWO CLUBS Starting or running a club is a demanding task which is often taken on by volunteers, who alongside their involvement in the club, will often hold a full time job. The burdens which are laid upon clubs in their day-to-day existence will influence the provision and effectiveness of community sports clubs in the UK and so impact on the opportunities for people to take part and on overall participation levels. STRUGGLES SETTING UP A NEW CLUB: CASE STUDY Manvers Waterfront Boat Club (MWBC) is the result of a regeneration project at an old coal mine. In order to gain planning permission the commercial developer had to agree to provide a boat house at the lake they were planning. A lack of provision in South Yorkshire meant Canoe England was keen to be involved and support the development of Manvers Waterfront Boat Club. Without their commitment and resourcefulness, volunteers could not have battled through the difficulties faced. As the site was an old coal mine no postcode existed for it. MWBC applied for a postcode but it turned out that the last letter in the postcode was wrong. Correcting this was a lengthy process taking up much of the vice-president s time. Not having the right postcode = application forms couldn t be processed = no grant funding, all applications were rejected. Even local funding authorities who could see that the club existed could not release funding due to the incorrect post code. Finally, armed with the right postcode the club then struggled to secure a utility provider as they lacked a credit rating. The chairman had to take personal responsibility and sign up in his own name. OUTCOME: Despite these barriers and with the support of Canoe England MWBC is set to be a success. There are members who take part in Canoeing, Angling, Triathlon and Diving. 40% are female 200 are juniors Helped reduce high levels of anti-social behaviour local young people queuing up on club nights to participate in supervised canoe lessons or swimming.

21 CLUBS 20 One thing which is immediately apparent when looking at clubs in the UK is the variety of legal structures that can be chosen by a sports club. In the UK there are no requirements as to the legal structure a club has to adopt, whereas in other countries there are. For example in France sports clubs are obliged to register as an association declaré (under Association 1901) to have a legal status. Clubs in UK therefore can have several different legal forms, principally as: Unincorporated Associations Incorporation as a Limited Company (by guarantee or by shares) Mutual Society. Regardless of the legal form above, clubs can also apply for special status as a: Community Amateur Sports Club Registered Charity. There are no requirements as to the legal structure a UK sports club has to adopt. In addition they can choose to apply for special status. Common legal forms Unincorporated associations A group of people bound together by their club constitution or rules. Little administration but the club has no separate legal identity to its members meaning committee members will be personally liable when entering into contracts. Incorporation as a Limited Company (by guarantee or by shares) Forming a company creates a separate legal identity for the club. This means members are not liable other than for the amount they have guaranteed to pay (usually 1) however this status requires regular filing of information to Companies House and directors of the company will have to comply with Company Law. Mutual Society A separate legal identity for the club with limited liability for members. All members have equal voting rights and any profits must be re-invested in the club. Special status Community Amateur Sports Club (CASC) Financial status as recognised by HMRC for clubs that provide facilities for and promote participation in sport. Whilst the financial benefits from tax reliefs are valuable for clubs the scheme is unduly restrictive on some clubs and offers no benefit to non-facility owning clubs. Registered Charity Clubs that are registered as charities receive greater tax advantages than CASCs. They typically have an easier time fundraising and accessing funding pots targeted at charities only, but becoming a charity requires a significant amount of paperwork both to register and to file annual accounts and returns to the Charity Commission. Figure one Legal structures and special status options for UK clubs

22 21 CHAPTER TWO Each legal form has its own advantages and disadvantages and some are more suited to certain clubs than others. It is up to each club to decide if they wish to choose to have special status. Since clubs are mainly run by volunteers who cannot be expected to be experts on legal matters, there can be some confusion as to which structure is the best option. In some instances a club may not even be aware of all of the options available to it. Good practice for national governing bodies is to act proactively and provide guidance for clubs on the benefits and suitability of each legal structure. This Review suggests that the sports movement, for example runningsports with the aid of the Sport and Recreation Alliance and national governing bodies, should produce guidance that governing bodies can promote to their clubs which identifies in a simple manner with clear information the structure that best fits the club. A document along these lines has recently been produced by The Football Association. It goes through each structure and identifies the pros and cons for different statuses along with step-by-step guidance on how to become incorporated. The RFU has also published extensive guidance on incorporation, charity and CASC status which is available on its website. Law in Sport has also recently produced guidance on the organisational options and statuses available to amateur and semi-professional sports clubs that is not specific to a sport. This is a really good starting point but clubs are still left with a lot of information to digest before they make a decision and that is if this information reaches the clubs in the first place. Documents designed to help clubs exists but must be more widely promoted through as many avenues as possible. National governing bodies, sports councils, the Sport and Recreation Alliance, county sports partnerships and runningsports all have a responsibility to do this. Published guidance, even if extensive and widely promoted, can still only

23 CLUBS 22 provide a club volunteer with a basic grounding for making decisions about the future of their club. Holding a conversation with a real person or a club which has already been through the process will allow a volunteer to ask questions and understand their options more fully. In addition to existing literature, simple flowchart guidance should be created to direct clubs to what are most likely to be the best options for them. Clubs can then focus the start of their investigations there, at which point more tailored support, advice and local help put into place by governing bodies should be available to them. If a national governing body does not have the capacity to offer this themselves, best practice is to seek partnerships, advice and models from those who do.

24 23 CHAPTER TWO COMMUNITY AMATEUR SPORTS CLUBS (CASCs) The Community Amateur Sports Club scheme recognises the positive impact sports clubs have on the community by conveying financial advantages to clubs. It was introduced in April 2002 in part to tackle the problem that unregistered sports clubs face the same taxes as profit-making companies. The scheme mainly offers financial benefits to the club with Her Majesty s Revenue and Customs (HMRC) accepting CASCs as distinct from businesses for corporation tax and business rate purposes, and by allowing clubs to claim Gift Aid on donations. All CASC registered clubs are therefore entitled to 80% mandatory rate relief, corporation tax exemptions on interest, Gift Aid and capital gains (provided these funds are used for qualified purposes), and limited exemptions from corporation tax on profits from trade income and fund raising where gross income is less than 30,000 per annum and for gross rental income of less than 20,000 per annum. To date just under 6,000 clubs have joined the scheme and estimates show that since 2002, CASCs have 1 saved 85.1 million. It is no wonder that 1 in 3 (32%) of the sports clubs surveyed for this review have reported CASC status to be having a positive impact on their ability to run. 1 Deloitte (2010), Monthly Analysis of Community Amateur Sports Club Registrations Month Ended 31 October 2010 Figure two The impact of CASC status What impact has CASC status had on the running of your sports club or your ability to volunteer, either now or in the past? 1 in 3 32% 32% 68% -Positive impact -Other CASC relieves the financial burden on a small club operated 100% by volunteers who are self-funding with no business activity. Canoe club, West Midlands 1 in 3 sports clubs (32%) says CASC status has a positive impact on them.

25 CLUBS 24 This Review recognises however that more clubs should be able to benefit from becoming a CASC since it is estimated that 150 million per year is lost by clubs that aren t 2 registered. In particular research by Deloitte has shown that disability sports clubs are losing out on tax savings by not registering as 3 CASCs. In addition, whilst there are financial benefits to becoming a CASC, it is possible for a community sports club to obtain charitable status making the club eligible for grants and funding directed at charities, better tax reliefs and more widely acknowledging the community role the club plays. The availability of the option to register as a charity is not widely known amongst sports clubs and good practice for national governing bodies is to do everything possible to publicise the charity option for clubs whom they think it might be suitable (for more on charitable status for clubs please see the Charity section in this chapter and the Charities Act section in the Finance and Taxation Chapter). 2 Richard Baldwin (January 2011), Chair CASC Development Forum 3 Deloitte (2010), Disability sports clubs missing out on multi-million pound tax boost, available online at tries/sportsbusinessgroup/in-thepress/0fe1fbb5644ba210vgnvcm b56f00 arcrd.htm (last accessed 21 January 2011) CASC introduction has taken away the uncertainty of Annual Rate Relief by local government. We are now guaranteed 80% rate relief which enables us to plan with some certainty for the future. Sports club, South East England CASC status has allowed our club to find its feet and start to lay down a strong basis for the future. Prior to CASC we spent a lot of money through rates, funding the local authority, now that money can and is being reinvested in the club, its premises and its equipment. We are year-on-year, growing and providing a better sporting facility and a better base for our sailors We can now spend our money where we see a need, without having the chains of paying vast sums to an authority who gave us very little or no support. Angling club, South East England

26 25 CHAPTER TWO Figure three Financial benefits for Community Amateur Sports Clubs (CASCs) Since 2002 it is estimated CASCs have saved 85.1 million All CASCs are entitled to: 80% mandatory rate relief. Tax-free income from interest and capital gains (if used for qualifying purposes). Exemptions from corporation tax on profits from trade income and fundraising where gross income is less than 30,000 per annum. Exemptions from corporation tax on gross rental income where it is less than 20,000 per annum. If the limits are exceeded 100% of the income is taxable without any marginal reliefs Claim Gift Aid on individual donations. The CASC scheme provides great opportunities for sport to generate funds. After eight years it is time to consider how to develop and promote the scheme further. In particular one way in which CASC status can appeal to more clubs is to make it more beneficial and relevant to non-facility owning clubs. The CASC scheme needs refining by amending Part 13 Chapter 9 of the Corporation Tax Act 2010 and sport must take more responsibility to champion and promote it. The Sport and Recreation Alliance will work with government to refine CASC legislation; then the onus for effectively promoting the CASC scheme rests with national governing bodies.

27 CLUBS 26 Amendments to the CASC scheme should include; Facility hire and use of sporting facilities for CASCs should be at a reduced rate for VAT purposes in line with the EU VAT Directive CASCs with taxable profits of less than 15,000 should fall into a nil-rate band for corporation tax CASCs should be allowed to claim Gift Aid on junior subscriptions Registered CASCs with a surplus of less than 5,000 per annum should be able to participate in informal ticket sales in advance of small lotteries and raffles at specific fundraising events CASCs are entitled to claim tax relief on trade income for corporation tax. This currently applies if their trade income is below 30,000 annually and/or when their gross rental income is less than 20,000 per annum. The limits should be increased and rise in line with inflation thereafter. Had these limits increased in line with the retail price index they would currently stand at 37,400 and 25,000 respectively. CASCs are able to reclaim on VAT attributable to exempt income. The de minimus limit for which CASCs are allowed to reclaim all their input VAT is 7,500 per annum. This figure has not been changed since 1994 and should rise for CASCs in line with the retail price index to just over 11,000 Allowing CASCs to receive the same zero-rating benefits on construction expenditure as charities Music licensing charges should be zero-rated for CASCs Alcohol licensing evaluations should automatically place CASCs in Band A Accepting clubs with semi-professional players that make up less than 10% of their total club membership to become CASCs Allowing a club to de-register from being a CASC if they can prove it is no longer of benefit to the club.

28 27 CHAPTER TWO This Review would like to make clear that whilst some of the proposed amendments for the CASC scheme would bring it more in line with charitable status, that CASC status should remain separate from charitable status. Whilst charitable status is suitable for some sports clubs (see the section on Charitable Status in this chapter), for many small community sports clubs, it is too restrictive, too complex and requires far too much administrative work. The CASC scheme originated out of the need for lighter touch regulation for community sports clubs (providing affordable opportunities for people to participate in healthy physical activity), which also provided some of the financial benefits of being a charity. Despite enormous financial gains for clubs that become charities, the requirements for eligibility are not tailored to the needs of many sports clubs. The flexibility for clubs to choose the most suitable model for their needs must remain. One barrier that prevents clubs from registering as CASCs is that they are not able to de-register once the commitment has been made, although HMRC retains the power to allow this. This commitment is doubly off-putting as the scheme reserves the right to make amendments to its regulations which must then be complied with by registered clubs. A club should be able to de-register from being a CASC if they can prove that it is no longer of benefit to the club. Clubs have a real fear about their future in relation to becoming a CASC with a primary concern focusing on the possibility of the club developing upwards through the pyramid to a position where they will want to start to pay players. If this happens then the club faces de-registration and a draconian tax charge for example, a facility-owning club may have to pay tax on a deemed profit from the sale of its property even though it has not sold it! The objective of this rule is to prevent clubs from taking benefits of government schemes aimed at encouraging community provision, using these benefits for their development, and then closing their doors for wider public use. If a club continues to offer community and youth facilities and activities after they have exited the CASC scheme they should be exempt from repaying tax.

29 CLUBS 28 To become a CASC clubs must meet the following criteria: Be a recognised sport. Be open to the whole community this means membership policies can t discriminate in any way. Figure four Eligibility criteria for becoming a Community Amateur Sports Club (CASC) Be organised on an amateur basis with no semi-professional or professional players. Be non-profit making - any surplus income should be re-invested in the club. Primarily exist to provide sporting facilities and promote participation. Have managers in place that are fit and proper persons to manage the club. Agree to distribute remaining assets to sporting use in the event of the club ceasing to operate. Have an appropriate club constitution that reflects all of the above. If a club exists to make a profit or outside of the good of the community they should rightly not qualify to become a CASC. Having the capacity to pay players who are at a semi-professional or higher level indicates that a club is both financially more stable and that they do not solely exist to contribute to the community. However, the problem with this is that large clubs (particularly in football) may have one team of semi-professional players and a dozen or so community teams. In this instance, for the dozen or so community teams to become CASCs the club must split itself up so that the professional players technically belong to another club. Understanding this process and then carrying it through is just another burden for sport. The CASC scheme should look at the proportion of paid players in relation to the proportion of community members at a club and accept all clubs whose semi-professional players make up less than 10% of the total club membership.

30 29 CHAPTER TWO As our 1st team worked its way up to semi-professional leagues and to match other clubs within this sphere, we had to begin offering players some remuneration or they would have gone elsewhere, leaving us with no team after all the hard work put in to reach the promotion they wanted. This meant we are having to split that team from the club to run as their own entity which brings administration problems in itself as well as more strain on the volunteer workforce which is hard enough to maintain and encourage to keep helping. Sports club, North East England Clubs should not be penalised for nurturing their talent through the provision of good facilities and coaching. If the threshold of 10% is reached, then the clubs should be allowed to exit the CASC scheme if they believe it to no longer be of benefit to their club, or choose to divide their club up as they wish. However, suitable measures would need to be in place with such an approach to ensure that if a club exiting the CASC scheme does not continue to benefit the community to a sufficient extent, and has used its CASC status as a platform to make a profit outside of the benefit to the community, it returns any financial benefits received through Gift Aid and tax benefits derived through CASC status. Whilst the CASC scheme saves clubs millions of pounds, there are still financial improvements which can be made to it. Given that the majority of clubs who apply to become CASCs are asset-owning and seeking to receive the mandatory 80% rate relief that it ensures, it does not make sense that the scheme does not include a VAT exemption when building or improving facilities. In effect the tax reliefs that CASCs benefit from are being clawed back through additional VAT costs. The VAT law should be amended so that CASCs are exempt from VAT on capital expenditure this could be achieved by including CASCs in the existing charity zero-rating relief on construction costs. Another significant barrier within the scheme surrounds Gift Aid, to which CASCs are entitled to some benefits, but not all. As of 2002, a CASC can claim Gift Aid on donations made by individuals to the club. This means that the individual donating gets tax relief on the donation at higher rates, and the club can claim back the income tax on the amount donated from Her Majesty s Revenue and Customs (HMRC). With the ability to claim ( from 6 April 2011) for every 100 donated, Gift Aid potentially offers a huge financial benefit for community clubs. Where the CASC scheme falls short on its Gift Aid offer is that it does not allow clubs to claim it on either corporate donations or member and junior subscription fees (for more on corporate donations and Gift Aid please see the chapter on Finance and Funding). Including both of these categories in the CASC legislation would increase the funding reaching the club by giving tax rebates on individual donations and allowing local businesses tax reliefs on their support of the work of volunteers in their local communities. This would lead to clubs having more money to spend on equipment and invest in facilities, increasing the quality of experience for members and allowing them to attract new members, thus

31 CLUBS 30 CASC does not permit us to treat monies obtained by subscription as Gift Aid like it does with charities meaning that there is a lost revenue source for the club. Cricket club, South East England increasing participation. Gift Aid on subscriptions is already available to certain registered charities, with organisations such as the National Trust and London Zoo able to claim Gift Aid on their entry fees the equivalent of a club membership subscription. In addition, Gift Aid on subscriptions is also available for membership to the Scouts - that is Gift Aid is directly available on a membership subscription to an organisation that provides activities for young people. Given the community role of not-for-profit clubs, which by definition CASCs are, Section 430(2) Income Tax Act 2007 should be amended accordingly to allow for Gift Aid on junior subscription fees. Corporate donations to CASCs should also be tax deductible in the same way as they are for charities. One way to assist clubs and also to add a tangible benefit to being a CASC club would be to allow CASC registered clubs to claim Gift Aid on junior subscriptions and membership fees so that the money gained can be reinvested in the sporting infrastructure and ensure that community sport provision can be maintained beyond This would be a quick and easy win and could begin immediately to shore up the club structures locally. Swimming club, East Midlands